Earnings call transcript Q4 2022

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Operator

Good afternoon. Thank you for attending today's LendingClub Fourth Quarter 2022 Earnings Conference Call. My name is Megan and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.

I would now like to pass the conference over to our host Sameer Gulati with LendingClub. ahead. go Please

Sameer Gulati

good full and to fourth LendingClub's Thank XXXX afternoon. earnings and year conference quarter you, Welcome call.

and Joining me events LaBenne, CEO; recent results our CFO. Drew today to are talk Scott about and Sanborn,

accompanying presentation of section the find website. can our release Investor our on earnings Relations the You

be submitted call, the for email. also consideration to of the analysts, we questions via On some from questions addition will in answering that were

that and are forecasts Our These based platform our conditions services remarks forward-looking business and and today are and risks will and and products current our and loan but and include, financial statements involve to competitive uncertainties. include statements expectations outlook, limited strategy, performance. future future on not volume, advantages macroeconomic

the by to that cause is SEC, and and these as forward-looking Our filed materially may differ our XX-K our the subsequent actual today's results statements. these most could contemplated based Securities obligation as are XX-K. we call differ this press results Exchange XX-Q upcoming described with those update of materially no in of and are statements result Forms release make well recent Factors or information to new events. on we as filings from statements Form these including Any today, undertake forward-looking our assumptions a that with future as on made Commission, and

book these including Our share net relating believe remarks measures also We value provide measures non-GAAP per common tangible useful non-GAAP our performance, to pre-provision revenue. supplemental include and information.

our on GAAP in reconciliation the comparable to can release. our measures of a and accompanying presentation most find use You more non-GAAP information measures the directly earnings

the turn like I'd now, call over to to And Scott.

Scott Sanborn

out and range, were the in company Sameer. high our of power near earnings Both solid headwinds. numbers. guidance well evolving took Welcome results. The with is of Thanks, position XXXX right. our current model to navigate to everyone. our evident we the end We importantly, action and closed All revenue

in decline despite net revenue marketplace anticipated interest with XXXX to originations. income revenue and loan offset line stream us decline a deliver total in the enabled of in growing of Our quarter fourth

doubling of full income, net of allowed our the back after balance interest to invested or growth revenue valuation XX% sheet, benefits release marketplace investment our of the allowance. double a sense held the than a this in million our size results net million the over strong you our We These into portfolio, to business long-term. for For the generated income. provide record exclude power from loan year, our of more us $XXX tax which we begin $XXX and earnings

stabilizes, Our with grow interest and revenue growth To to revenue as goal, is well corresponding stream the that. plans sheet marketplace do bank the when need we this destination, navigate to the reach environment compelling first a capital-light environment, income through earnings to driver. complement, as to have as current a acting we the membership continue balance just and

can ourselves unclear While land, positioning manage the would remain and economy U.S. and focused the it's exactly are the through best on we what to Fed where control we uncertainty.

areas. profitability One, our in and manage through and two, credit a cycle; the key investments. and product continuing three on to technology practical focused preserving sheet; is balance focus Our being three, strong prudently and maintaining quality

remain will ourselves. and credit, for So investors laser managing starting with where both risk marketplace we our on credit focused

continuing sheet note in prime our well representing and customers I'd high perform Pages XX hold as you'll loans we balance presentation. to see are and the prime XX on on our

quality pursuing the over For loans are marketplace, sold quantity. we through

to loans we provide reprice is quarters, compressed can about have environment both spoken be in have we investors. our we to selective on pressure putting this volume for the the the opportunity In is non-bank relative funds higher environment, our value responsibility As reflect rate rate cost lower marketplace as credit. until of the on several volumes can especially we dramatic and increase for the

vigilant near anticipated with to incomes. delinquencies among but need we and proactive. and those most averages, We in prime notably industry and lower have especially on have outperformed consumers Our remain our seen members, pressure

savings pace We dynamic are of also change a in seeing prepayment areas and rates like speeds.

strength is core to in were our ability signals. our to our our throughout and to A use XXXX for underwriting tightening technology tighten emerging Accordingly, continued quickly adapt we year. early have data infrastructure to the and LendingClub proactive advantage to begin

XX% volumes their near-prime than peak. For are down reference, our from fourth quarter more

the remains With benefit debt fixed-rate APR, stabilize credit as high-cost more term, will average the footing, loan. and grow to an card our installment by rebound. U.S. card XX% economy consumers refinancing building opportunity their we regains a volumes And Longer interest marketplace significant. loans even over credit its to balances expect rates personal at into

outlook. Our sheet. to to base decision our difficult recently second key profitability is maintain objective streamline a to strong and our the announced balance better align expense We our to operations

or stops time, sheet stable maintain portfolio bolstered roughly acquiring to the hikes. term, revenue income until be seasoned, high-quality from large keeping a our slows rate plan Fed marketplace interest pressure near marketplace at with ideally stream also balance revenue we the same our the its current under At interest by of of In the income by size. expect investors. net a We one to we loans

create million core is product in the focus that technology continue for to value of members. area will prudently capabilities our final invest more Our and to X.X

is remain Certainly, and continue investments. of our of slowing the we economy pace While adjust our out as we to pace are future we'll will investment in committed the growth needed. as macro environment. building opportunities our will we the that the vision, XXXX current to blocks mindful And intent in of of place put we remain the come down long-term to our support

the outlook. to going to and detailed So Drew walk through now financial I'm turn results you our it over to

Drew LaBenne

Thanks, Scott. hello everyone. And

billion, compared through quarter third prior $X.X and of to $X.X in greater were starting our $X.X detail, the in and Let billion balance the billion the take you XXXX. for in me Originations the our quarter with sheet. financials year originations

strong discipline were earlier, discussed underwriting in Scott combination for curtailing of As our purchases higher by to rates a interest quality. originations credit continued and investor maintain demand loan impacted

to As the we compared XXXX. over personal sheet in the of balance showed retain quarter deploy we the loans, to course profitable of more and highly our previous significant capital growth

XX% Total billion to year-over-year loan with in period, assets in primarily growth personal to QX, over increased same $X XXX% the our up loans. held-for-investment due portfolio

that We scaled XXX% also platform now online the have grew year-over-year acquired. we that deposits banking we

rate Radius the highlights assets, in billion $X.X which benefits model. firmly of the over the and XX% together first quarter in we of to banking have loan growth bringing closing compounded a strength of of the from the the $X.X Since in is assets bank grown XXXX, acquisition LendingClub's with billion originations of annual digital

in acquired Scott the Earlier, we mentioned portfolio December.

the performance. portfolio its as value for duration accounting option are quality short under fair remaining expected the in high the We volatility around limit credit

this it attractive have interest broken and very in materials. separately table margin expect to generate the returns in We out net portfolio our earnings

revenue those year-over-year on reflecting the was of sales. XX% essentially growth originations by flat Now income price net through marketplace on XX% sold and million, income. sequentially a lower offset Total interest to the by decline was as Revenue non-interest $XX revenue. decreased in

enhanced the the environment to decision XXXX difficult resiliency of for during marketplace. in a retention Our more increase has our franchise loan

on in increased an yielding X.X% of year consumer the interest loans balance Net to higher the from X.X% in prior proportion the period margin sheet. increase due to

deposits. sequential pass the online loans X.X% due drop the quarter the of between saw to to repricing on our we from expected, As in personal of a higher interest third current to relative rates primarily lag XXXX, ability along new

continue We for net stop them these and abate quarter expect the interest should the first as to to pressure again decline all slow the increases Fed's trends in margin the together. rate of XXXX or

severance same in of for compared $X previous XXXX and announced to lower than expense more reduction the channels benefits $X competitive from expected charges previously plan. expense efficiency the from quarter. the included Total Compensation interest the million quarter was given use efficient reduction was improved net million Marketing expense pressure. and $X.X better and the of million quarter a in

$XX origination expenses million Marketing to primarily lower reflecting improved quarter, by volumes. third the compared

in to revenues moved Our consolidated the as third XX% sequentially. from quarter XX.X% efficiency ratio decreased

the to generate Scott reduction staff the savings difficult annual rate run benefits. necessary The was As challenging reductions discussed, million of and given more but million decision, outlook. compensation will $XX $XX and came in a in structure, savings efficiency businesses, management two in and originations real the ceasing primarily and Radius. initiatives from equipment from our an commercial we estate improved strategic acquired slowdown These that in commercial some near-term finance

take charge the will in first $X.X severance quarter. million We the of remaining

the by performance. pre-provision underlying the which we volatility key revenue, provisioning. and on PPNR income company net the quarter provides credit useful shows net the PPNR our move quarterly loss Slide In XXXX, a for with other income metric, without gauge as the measure evaluating the statement metrics. to caused PPNR, along is or performance better will of a XX for

increased the million fourth For quarter, the which XXXX. in XX% $XX.X we compared PPNR had same to quarter of

We remain credit performance pleased portfolio. the in with our of

balance million, dollar the loan lower credit amount primarily held provision of was for Our in million than to the decrease previous due $XX sheet. a losses quarter, originations $XX on

increased from discounted recognition effect expense quarter ratio, of the due of Our coverage allowance ongoing to provision in to excluding lifetime PPP at for origination. X.X% losses loans, X.X% previous the

tax our valuation credits. In of tax as from again R&D as the quarter, rate benefited reversal our allowance fourth well a remaining

million. For had the of we benefit quarter, $X.X a tax

XX%, the but rate tax in rate XXXX, factors a such impact other enter price tax volatility will basis. as we approximately going on is expected movement As we forward continue expect be reported our and share quarter-to-quarter to to less taxes,

grew at $XX.XX book per quarter. share Tangible of end common share per XX% fourth the to value year-over-year the

on arise. for capital strategically maintained through to the of environment positions and top as navigate ratios deploy strong have the losses. allowance to a us ability provide better This We current opportunities capital significant credit

Now update as please XX-plus well to prime held-for-investment as with the you XX, servicing personal an delinquencies loan we turn personal where our of portfolio. Page have day our loan to portfolio provided

true servicing HFI is see new quality portfolio. in the effect marketplace. and credit that The continues will the as origination normalize to prime slows of same portfolio own our seasons the in also growth portfolio You

near-term. originations the this continue expect trend will We given in level lower of the

and are that comparability planning not data, to in future. Given changing we are the creating seasoning issues historical provide with slide trends this growth

next page, performance. we provides the cleaner disclosure On we detailed expectations, believe more of which on a view our have provided loss

sheet XX, Slide of see credit loans balance personal can on on So vintage. performance our by you

and economic to and X% XXXX the lifetime environment. loss respectively. vintages both vintages the for XXXX the be expect for qualitative X.X% provisions to up The includes of estimate We uncertain

stimulus The credit normalization XXXX quality but of vintage government The credit effect to move of delivered also a given the pandemic. the credit a higher strong performance a trends. mix vintage XXXX of very during reflects

X% to We life over economic could vary that but credit vintage, conditions the annualized XXXX losses expect be the net if significantly. approximately of deteriorate

as allowance of how realized the end have For our we providing been for future for represents estimate losses much through through already coming breakout credit in statement, of of much vintage, we will X CECL XXXX, time. losses, charge-offs the reserved income been provision the Day are we mainly remaining how discounting and provision how each over of have in much the expense the which take

in interest and losses, the mid-XX% in These the levered plan growing at net we look margin we If earnings sheet. balance range. credit to factor available post-tax low to expect returns variable we are invest returns our and expenses the annualized reason the

Now about XXXX. guidance and thinking how to we’re let’s move

Given the broader we guidance. quarterly are to uncertainty, macroeconomic moving

origination prudent the on billion, outlook $X.X reflecting pressure our billion is quarter, first the rate-driven to $X.X demand. and marketplace underwriting For

our retain XX% our to maintain balance we originations to size for loan We HFI the of the to sheet. plan of quarter. expect XX% Therefore,

the originations loan quarter. retention to plan income we we marketplace net to in-period and positive line support with invest unit fourth expect future For economics earnings in maintain We sell, into earnings. levels

will available The maintain investment. when significant a we required drive underwriting, CECL excess to charge approach Day on impact impact the have want earnings can As on generate we flexibility In capital, to the maintain reinvest we balance and retention of X returns. to credit grow disciplined loan we performance our XXXX, a sheet earnings. for

in a pre-provision guidance services focus companies more for CECL revenue, which mind, to net is relevant we metric this our have using evolved With accounting. financial

for million $XX to million first quarter. $XX is the PPNR using outlook Our

me let comments. Scott it With closing turn back that, for to

Scott Sanborn

well Clearly, that play over structural near-term variables and Drew. economic outlook, strategic but help you, multiple have at the do time. have us we company that I believe that will and affected Thank advantages outperform here the we’ve our are positioned

we year, As to a progress I wanted made take back step off the the we we’ve recap just to since the acquired finish bank.

we’ve half completely transformed revenue, have recurring doubled sheet, added of business. two years, the almost we more significantly millions quarterly grown In our in of stream tens financial than cut balance profile revenue the issuance represents the of a and We’ve that equity. costs, new our

strong through headwinds. fundamentals manage will us ultimately These will temporary help what be

growth remain business credit stabilize at card believe card balances our credit be drive core resume refinancing APRs well-positioned rates marketplace and that near-record or will interest we to and and highs, As of quickly revenue.

wanted With who say to, of who LendingClubbers, recently we thanks are for to to today to us that, my with contributions to sincere all had fellow company their both I customers. to those our goodbye our say a and and those

time, for for and again I’ll it questions. your Thanks up it. That’s open

Operator

Thank first Our comes Bill the Research. you. question Instructions] from of with line Seaport [Operator Ryan

Your line is open. now

Bill Ryan

Thanks for at $XX it you I with $X.X billion. $XX of Starting of million with my it, guidance, your taking PPNR to originations question. million, looking you of billion the have look kind $X.X and was to at

midpoint. a take You

was, believe, consumer the was portfolio originations. on I of a provision reserve X.X% Your retained

in looks might breakeven, it math, plus minus QX. or like you So assuming be that

correct? then use? of X.X% that, Is in and provision? XX% charge roll cost How a QX reduce does And something tying you’ve there the the the was of to incremental over guidance? kind into of kind the reduction spill number that cost any in the – a with variable kick more got fixed in? there really QX? start that Or you good took kind Or Is to is cost it the long of the expenses, to before So that structure.

Drew LaBenne

Bill Yes. the for question. Thanks Great.

start with me let provision So question the first.

have on factors components CECL. Keep day other into that qualitative well. discount mind provision one as then correct that day you’re So and accretion one that the are of ratio. the the we go The the in on

one so the after that it accretion in more about of discount the heavily first origination. and really is, second thing And quarter hits

back in. you accretion our if So origination look a book quarter trends, back that had amount at this coming of higher

terms forward I We have if QX, recent remixing don’t credit. but look the in you talk we’re amounts, to trends we just originations. in quality of about As it should think about dollar as want to of much, less ratio accretion higher to because probably the

very expect And come quarter-over-quarter. so just would a as we obviously measure. actually volatile right I down provision to that now, it’s But said,

are So given in possible any a the are outcomes there lot that provision quarter. of on line different

so cost expenses, on the on market… Second variable XX%

Scott Sanborn

the guiding it. of plan to other loans want would add. details Bill, put maintain those sheet that given the grow the one the into that. of important we’ve the our just other we earnings we’ve to shared one to thing continue we other hear of should add, sure the provision make There’s permit just sheet. reasons got is Sorry, the volatility to is, extent intent That’s intention be is the available to the balance the part to earnings, the To you sheet message and of to to why on attractiveness balance we’re able the the also we’re both the balance not continue to

Drew LaBenne

sort that as the quality down that – the is I originations expect reduction of we in will be annualized putting portion the the the that majority of is savings cost that cost, should are quarter savings less you’ve that In our which on just also have as fixed the declined, seen XX%, higher balance provision reduction. of we to And comes then higher which see come as QX, biggest loans already well. that charge each base On on quality the we’re there is Yes. And But reported variable variable as lower obviously in you’ll – also originations the we on than have cost some marketing. down sheet, QX, vast benefits provision. we’re expenses, going back loans, added upfront

Bill Ryan

of expenses both timing, But through? come of as terms those in

Drew LaBenne

reduction getting in sorry, the from the will through those force, in QX. come – that savings we’re so The Yes.

meaningful wouldn’t compared reductions. little that remaining impact And reductions cost still we million more almost mentioned. So variable of a full a the then call we’re those time that million except that’s little $XX the there’s – for get will $XX citing the the that charge that in from but in I of originations, down over come severance in lagged reductions I may to to overall the bit in

Bill Ryan

you. Thank Okay.

Operator

Thank you.

comes line David Our question Wedbush the next Chiaverini Securities. with from of

line is now Your open.

David Chiaverini

been wanted with that going minimal would the imagine taking speak. be building, basically of additional content that questions. reserve to the for on since loan necessarily since loans would that don’t being with the you taken, provision loss to growing, I about have isn’t wouldn’t I already you the thanks to flat Hi, the have aside reserves – question that portfolio loan follow-up forward the portfolio so the essentially provision. set

offs essentially Is match it charge a have would quarter. So you the reserve basically net think – don’t I portfolio? way to loan it would that that right the in of with flat provision think the would the to much

Drew LaBenne

not to that’s you need we flat that And back the have offset will loan more going No, after book. need keep to first well. quarters origination, keep – still a I CECL we to couple more to But couple on we loaded originate then but are still portfolio, a have originating first loans on tail that’s front one take that loaded well. runoff. to charge that’s as accretion order to in correct, a quite that day loans because And to as new the the occurs there’s said, as the those

David Chiaverini

I see.

in comfort mentioned where sheet right is, you of the to, garnering level they your so capital growing about constraint deposit is balance the there on capital I to of grow over your think significant to of shifting you’ve deposits. the then is in And several way when success ratios Okay. kind reinvesting balance over growth kind sheet? fourth quarter. of Is any look past Because at ended the other the had kind on quarters,

what’s talk balance about sheet growth? you your could constraining So

Drew LaBenne

Sure, yes.

balance say earnings, for giving. guidance would we’re into I debatable, the ingredients the we us not liquidity think our the really – So about the third capital growing go one’s maybe sheet right? And that if but and with with

have still to capital grow. we So

Our and Tier XX.X%. the the foreseeable online there. X quarter. for capital level, growth We liquidity, had was liquidity the to deposit leverage ample we No each continue And fund been was XX.X% future. sorry, – and our at space enough to we’re bank that generating has large have concerns

goes and up that grow balance for against balance – the more sheet profitability. we CECL means take, sheet, loans more the charge to that when But which want originate that we

we much a have So balance as as guidance need that. quarter, used profitable as any goal every that do just the still the we against income longer. on basis remaining net the you of we’re We giving haven’t

So that flexibility. gives some more us

David Chiaverini

Got loss it. compares And was then the basis? a that talk mentioned about Can last kind your net of me, one and to forward credit rate you X%. expectation long-term vintages these for about this on XX, of X%, approximately what for Slide how your go you how on

Drew LaBenne

Yes. Go ahead, Scott.

Scott Sanborn

Yes.

the can is much which that year as stimulus you XXXX XXXX better marginally you better, the and roughly in you end. if two and a XXXX the you expectation together total, put of two XXXX, benefit see what vintages pretty expectation. at those below, page, some on was still look our is our expectation across the marginally we’re So from had that was line for with given than pandemic

Drew LaBenne

marginally putting balance as it’s just it add. shareholders by Yes. still at we XXXX performing And vintage than would highly sheet accretive on in less the created terms thus but for far. I least value of The expected, maybe

David Chiaverini

it. very much. Thanks Got

Operator

line from Giuliano question Bologna Compass Point. of comes the with next Thank you. The

Your line is now open.

Giuliano Bologna

pricing getting the off, you to an of of happens I’d kind general will soon that as taking pricing lag at you for on in is thing we’re return evolving that in least and cycle. you platform the my and once and closer Thank end for thinking now a previous is that to pricing thinking of the a to what how on to Fed’s in have a couple the catches curious drive hike about up and that there’s slowdown volume about about of trajectory just a month Because about marketplace. seem is kind really kind quarters the one marketplace kind very questions. talked be Starting hopefully as whole. Is think

lower about when it getting, versus And a you’re then XQ. in I bit think was pricing XQ still like the that little looks pricing

HFI different go basis. As quarter versus forward forward, we kind the higher the loan yield quarter. we a back to on book saying during last going to where go curious think categories you’ve of moved as about you starting new that originations I’m been pricing commentary up, if on current were the pricing on increase the

Scott Sanborn

were I’ll start, I’ll see all the that I remember can there. Giuliano. in questions if

I me missed let one if know. So

That’s rate non-prime buyers are step of back, pressure, who’ve seen is of primarily So, volume the increase. lower biggest investors driven the pressure non and the the cost for those their significantly driver prime. of especially you’re the really, seeing capital the reduction and the buyers the non-bank where the –

And and curtailing same having to so that pressure some get driven we both there share rate the due volume economics in are space. that to up we price can until

we’re We’re seventies the banks last percentage now of the including loans percent. is, the the sold be quarter, in us, got to [ph] we – of

shifted buyers now. really it’s right bank So the to

move in is it’s rates have profile stable, and take across borrowers we continued points We we’ve environment testing and through. all making of an sure We at prices in risk and times, that the is itself the important mentioned coming price of understand cells our all maintain, think – we of up. to

are about deliberate We being that.

And up to going or prices quarter. I to we’re moved push over to we’ve basis So, so on want that. points the XX another; continue say roughly

solid. that That rebound abates year, as recently to credit that, as then the the that and So, quickly. would to a we environment market there’s we the and moves, you as we before, pretty the Fed lag down, Fed as the there’s again, begin we’ve so opportunity the Fed, as slows as would move, expect, assumes And – reignite. for moves, we environment, can credit marketplace mentioned move, as the ideally last is pressure all then cards the marketplace unemployment and shown, stops expect

of credit. certainly investors. I’m a the that and on obviously on that our of on the continuing so reasons being And factor focus on prudent and minds is, one our our we’re minds why That’s sure it’s proactive is

Sameer Gulati

in. the was I’ll from actually XX.X% – unsecured deferred And the items, majority XX.XX% HFI deferred NIM coming of the loans expected. slowed at – the that if vast QX, Juliana, you consumer down the the jump fees and portfolio, in just look decline expense from QX, because prepayments on table went yield that coming have as in

coming the So, I terms in think actual and the into the now, book, course book back coupon of that pricing abating. has mostly its run is pressure

Giuliano Bologna

are That ROE makes from at at sense. XX% lot of marginal you’re you’re across kind footnote Then the and going the capital of NIM yields table on even moment. the currently your implied the CDs in and looks using the of the looking benchmark to brokered of there, – and and kind XXXX but that high X% moment, up kind XX.X% any originations, I test XX% that even at you’re like to zip look – that’s you’re code as a when says X% build of at

going something does think So, you on kind or year? more XQ XX% the to is portfolio, the that yield you’re or higher XX% loans, loan be you the thinking that for and incremental kind that low it’ll on of blend that the full somewhere of in that – getting is think or about imply

Scott Sanborn

than proxy, the think, using broker we’re right, to better the I the X% closer actually is Yes, yes, map proxy little X%. it’s because a mostly

our using yield high not savings. actual we’re So,

match, go rate use now. CD; match if saying right a that out duration we we’re We’re brokered applying

rate taking we’re the component So, risk of here. out the equation sort of interest

Giuliano Bologna

helpful. very That’s

We’re go going to back – ahead.

Sorry.

Drew LaBenne

No, that’s fine.

got Go You it. ahead.

Giuliano Bologna

just balance that sheet to talking mean was that maybe I’m the capital a guys flat potentially maybe shake that somewhere were relatively was out. bit clarifying CECL a reserves. kind Sounds good. that growing you question keeping wrap wanted doesn’t of inclusive just, and One have portfolio thing of the assuming I then as acquired earnings about and little you

portfolio So the that kind mixing that of way into good of replaced with still CECL in you thinking reserves portfolio a more Is as this year. it? of runoff you’re a of

Drew LaBenne

great don’t – balance Yes. Yes. correct. That’s had growth. We we’ve sheet

we going portfolio, the that in out near to going because lose it’s runoff clearly of run the fairly that be off portfolio. replacing We’re given to slowing that quickly. that want that you includes don’t already, to term. good But down that it’s called seasoned, But is ground pretty

our the down big will generations. so addition quickly newer And that than pay more

Giuliano Bologna

I great. you questions answering back and That’s the jump for in will my Thank queue.

Operator

you. Thank

from line next John Janney comes question the Rowan Our of with Montgomery.

Your line is open. now

John Rowan

afternoon. Good

Just I portfolio acquired to or your well, earning prior I The the flat obviously, the to the deal? want basis, an the assets average understood on of given look quarter, than answer portfolio that, sure would the includes make question as that fourth loan correct. in XQ the timing higher

Drew LaBenne

of only sure had for quarter. loans, average On that should month as month because Yes. up, of we one it one I’m you’re picking we balances had only

full quarters QX. worth the So will get in we

quick, portfolio so about million ended the won’t we the the at. year XXX off does run it be Now

So of will over it course come there QX. the from down

John Rowan

a turned a just they and marketplace, were wondering big your the impact around portfolio. or Okay. bank were material predecessor that they’re of curious mean, make assuming bank indicates forward, any demand demand marketplace and obviously component And in, bank then that that does big anymore? be in the not if, market I’m they difference the going mentioned was I’m a demand? if client, then that in change made the there’ll acquisition I’m acquired, from U.S. obviously, those the in when just I bank sold and – you the just bought

Scott Sanborn

billion that client. was $X large So a It represents portfolio.

to where was intended So – and the they overall we a them announced mix the long owner new – participation very were work did when with the the long-term the acquisition ours. reducing significant that may their was continue not of anticipation But acquisition partner in relationship. announced, begin

impact, I them their down it materially, draw announced won’t was between the there when drew in like So purchases but to worked We no when was that approved. was say down. deal and

John Rowan

Okay. Thank you. right. All

Operator

Thank you.

question KBW. with the Our line of Michael from Perito comes next

now open. Your line is

Michael Perito

OpEx the questions. maybe for ask good for side Hey, question my guys. Thanks you afternoon, I Drew. taking on wanted to a

the X million, included So I restructuring look million you that charges. think if at quarter, we XXX about of about the were fourth

So of still if annualize two – investing. I XX, it you maybe to the right? call you mean it $XXX but components, So that some because your million. XX there's then is you kind take guys with out and

there's be going to growth I'm on So some that. assuming

not Just maybe more there? last hoping saw much? was context how is we for going you lot some nothing around I but give less thoughts wondering than assuming to I'm if the can be was that. it's year, a question and some what just

Drew LaBenne

Yes.

understand right? could on you – marketing, the about should subtract should some think could marketing. precise million; could, that we're It's ranges number a But out So to the rate you so I you precise that you to we you investors pretty the run gave, trend and the math all on reason apply The with one-time I tie do going and that get. think, talked charge, it. debt, the – somewhat then and volume specifically largely to take you differences, $XX going savings rate comp I just probably

forget we QX. little a more have in severance don't Just to take

there, dramatic I other we're but some mean, not expecting the line changes. takes items, and All puts there's

that because projects today. investments, drag be at example, should, from working where to working but but efficient where be we're on of a nothing and think, little get, your We amortization we'll are spend into to need some going come I new alter modeling depreciation will for make we to – and in majorly production, there's bit be we'll

Michael Perito

Okay.

Drew LaBenne

helpful? that Is

Michael Perito

how make tough it statements. philosophical I is. I I are, you guess, my that of that's Yes. well. as that. guys element can which tied to what just help. diversity for your of here heavily guess you I kind to more? about environment one you are coming the think other sense what term banks to Thanks obviously kind obviously the mean, longer universe of around mean, I'm curious No, personal it? in a often mind then of of kind do my diversify kind class, think is question, pretty big of it more picture just, it's kind thoughts definitive business I I like Scott. But But And question. high-level mean obviously, lending a And now, curious of does a just to make just asset coverage just so

Scott Sanborn

to thinking but more will more the Yes. than parallel, One revenue XXX% pursuing on marketplace to where interest stream balance, to is about, a because I marketplace we it revenue the off XX-XX are reach we've more as balance marketplace talked that is call this be now, in the coming of we transitioning of certainly it, fruition resilient couple a are sheet mean model, more in revenue we'll is. some about quickly. phases the income income from

we're real like has bank as of it We It's value. But capital-light face We market shocks serve marketplace a is The today. serve balance we sheet. wouldn't way seeing, have the with resilient grow. the can to customers. in less

as bigger an can that's shows pretty the So to power gets maintain and transition together, that we year is when last think that that the one part earnings sheet think yourself as marketplace, are eager generator. powerful think the and for And of you you we will the continue. be balance I working you of that

consumers. which like And we help is They us. other are this piece committed to we we finding then but year income, know very slowing And the and are a valuable it's ways second can credit, yes, our strong high consumer. down are really they

that off to just off the getting our bit investments. is of that takes eager for do I that, It's requires services are them we is, so ground and plan. time, more the year, new credit this think it and a ground And and products

it So are be, we'll are stopping we it. but not down, we slowing

Michael Perito

Yes.

last want to of with you kind lending just Okay. Radius commercial team the the from point balances no from longer Banc down I say if so forward? guys that I nothing to then Did this correctly. we the you will was sure be for guys? of that? would kind therefore, And from run that the stay Or heard one to assume misinterpret did over this I safe so, commercial make me, And one,

Scott Sanborn

So pieces finance. the three GGL, to equipment there are commercial There’s lending, real estate SBA commercial. and the

but which it, small there’s product of, where in – also are sell It’s market rate also business, consumer. robust closer we is should to similar hold businesses do that a dynamics So smaller terms closer has choose to you variable a you what the those GGL and the that those it. can are

the grow. Government estate Guaranteed just real piece, not So, piece, we I’d the continuing that for and as Lending this are in that set to are But bank returns that say environment finance, for we commercial equipment attractive shareholders. or

new So, originating there. loans aren’t we

So you go expect balances to yes, those could time over down.

than… slowly they paid more Now down

Michael Perito

what’s more the replaced going will for correct? flat you it’s there, Maybe be assume be loans Drew, because to are amortization the sheet that Yes, just personal follow-up. profitable to correct keeping those my balance that with if was

Drew LaBenne

Government XXXX. course grow who That banking And will grow expecting less They just, run than well. business diversify but I [ph] to our PL be the think refinance relationships, of as their SBA predictable, or slower we may to should decide is off so It we’re customers intention we right. it Lending part Guaranteed of slower have to over the faster.

Michael Perito

Thank Perfect. Okay. you guys.

Operator

questions Thank you. There are at time. no waiting this additional

over So, to I’ll back pass Sameer. the conference

Sameer Gulati

Thanks, Megan.

a of retail all-time do question do rates you question the at card this we And is, have from So, credit business? your highs, with one our how affecting balances and see investors.

Scott Sanborn

we Yes, the prepared to on remarks. mean touch tried the, in that I

material our that is loan to offer credit borrowers. of is these opportunity forward opportunity And, a yet. overall other we use capital are things very, expectations. we continue based card, on offer products of and moved earlier, bank acting growing that the which talked into Credit for side which to about sheet cards be the and earnings think, cost our – not Fed evolution tailwinds, borrowers. is of is diversifying yet, to have buyers position massive And to to not we advantage headwinds should will come to value take set are balances have services compelling moved it generates we’ll able down more us now will the real we will will the and able to turn there offer investor intention the be us believe our to and that our a even balance as value really be is very in for I our these, which on and the

Sameer Gulati

thank all Thank you if investor have for earnings follow-up and call the any release. joining Well contact you us for questions, Great. you. please

Operator

Earnings That a Call. Conference wonderful concludes you for the participation. LendingClub’s XXXX Thank Have your evening. Fourth Quarter

LendingClub (LC) 25 Jan 232022 Q4 Earnings call transcript